Under the sanctions of the West, Vladimir Putin should be made to give in in the medium term. But now the alliance of Ukraine supporters is feeling the economic consequences more and more painfully. The result: western support is beginning to crumble.
While three representatives of Old Europe – Scholz, Draghi and Macron – trudge through the devastation in the Kiev suburbs, the Kremlin ruler and war president speaks up with provocative self-confidence. The three EU politicians should use their time with Zelenskiy to take a “realistic look at the situation,” he says through the spokesman for the Russian presidential office, Dmitry Peskov.
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And this state of affairs, which feeds Putin’s self-confidence, does not look very favorable for the West at the moment. The anti-Putin alliance is smaller, more fragmented and less effective than hoped. Every second shot fired by the West hits its own knee.
1. The idea that economic warfare could bring Putin to his knees is proving to be a miscalculation. The economic sanctions have had a far greater impact on Western societies, which are suffering from high energy prices and disrupted supply chains and are now possibly slipping into recession after the US Federal Reserve’s emergency braking. “The global economy is in jeopardy,” said World Bank President David Malpass.
2. Putin still owns the most important starting materials for the production of wealth in the West: oil and gas. In the meantime, he has turned the tables and stopped his deliveries to Poland, Finland and the Netherlands and cut back to France, Italy, the Czech Republic and Austria.
3. Meanwhile, the Western sanctions regime has a high potential for self-harm. Gas deliveries to the Federal Republic of Germany were throttled through the Nord Stream 1 pipeline because a gas compressor unit was stuck in Montreal, Canada. It comes from Siemens Energy and cannot be delivered due to the western sanctions regime.
“The turbine is in the factory, Siemens cannot pick it up and not all other turbines fit,” explained Gazprom boss Alexei Miller yesterday at the international economic forum in St. Petersburg.
4. The same trouble with the subject of ship insurance. The latest sanctions by the EU and Great Britain stipulate that Russian oil tankers can no longer be insured. The result: “Oil tankers simply will not be able to transport Russian oil,” explains Olivier Blanchard, former chief economist at the IMF. He concludes:
“Russia will suffer a loss in revenue, but Europe and the US are likely to suffer from a significant rise in world oil prices.”
According to the Financial Times, the American government is currently in the process of relaxing the European sanctions rules in favor of the Russian tanker fleet. Biden has no desire to lose the midterm elections because of astronomical fuel prices.
5. More quickly than expected, Putin found alternative customers for those energy tranches that the West was no longer buying. In India and China, people are particularly happy about the discount that Putin is now granting. And quite a few also support him politically, as can be seen on the international stage: 40 heads of state and government, who represent around four billion people, did not want to condemn Russia’s attack on Ukraine at a UN general assembly.
6. Contrary to what the White House initially hoped, the Chinese are by no means moving away from Putin. You unlocked the war plan at the face-to-face meeting of Putin and Xi Jinping to open the Winter Olympics. They are demonstrating the strength of their arms brotherhood by flying a nuclear-armed fighter jet over the heads of Biden and the leaders of Australia, India and Japan during the Quadrilateral Security Dialogue (Quad) in Tokyo just 24 days ago.
7. The anti-Putin alliance is currently making no friends in the developing world. Since the war and the sanctions regime are not sparing the food markets either, there is a risk of hunger in Latin America, parts of Asia and Africa. Putin presents himself as the savior of the starving when he offers to ship Ukraine’s annual production of grain, corn and fertilizer through the port terminals he occupies. Ukraine does not want to give up its production. Starving for freedom?
Conclusion: Economies worldwide – and not only in Russia – are now under stress. There are no winners apart from the armaments corporations and oil companies. Putin alone could never have triggered this global energy, food and economic crisis. With the design of its sanctions regime, the West was its willing assistant.
The world witnesses a spectacle that has already been performed several times in the past: the big ones play poker, the little ones die. And the audience isn’t as innocent as they feel.
Gabor Steingart is one of the best-known journalists in the country. He publishes the newsletter The Pioneer Briefing. The podcast of the same name is Germany’s leading daily podcast for politics and business. Since May 2020, Steingart has been working with his editorial staff on the ship “The Pioneer One”. Before founding Media Pioneer, Steingart was, among other things, CEO of the Handelsblatt Media Group. You can subscribe to his free newsletter here.
